The Eurozone is struggling: GDP growth is only 0.1%. Tariffs: The US draft is here.

MILAN – Europe is grappling with a slowing economy , while negotiations with the United States intensify to finalize the tariffs imposed by Washington. Eurostat data released yesterday show a very marginal increase in eurozone GDP, with growth of 0.1% in the second quarter of 2025 compared to the previous quarter. In the first three months of the year, GDP growth was 0.5%. Compared to the second quarter of 2024, twelve months earlier, growth in the eurozone was 1.4%. In Italy, GDP fell 0.1% compared to the first quarter of the year and rose 0.4% compared to a year ago.

These figures aren't surprising to analysts, but what is causing some additional concern is the declining trend in industrial production in June: in the eurozone, a 1.3% decline more than offset the 1.1% increase recorded in May. On this front, while Italy saw its industrial production rise by 0.2% in June, the hardest hit came from Ireland, where the 11% decline in industrial production stems from a sharp cut in pharmaceutical exports to the US , after strong growth in the initial months, linked precisely to the decision of many importers to replenish their stocks before the tariffs arrived.

Meanwhile, regarding tariffs, a spokesperson for the EU Commission announced that Brussels has received the text of the trade agreement from the US , which imposes a 15% tariff on the vast majority of European exports. The text is not yet finalized and will be subject to negotiations, which—the Commission spokesperson added—it is hoped can be concluded "as soon as possible." Among the issues still open is, for example, vehicle imports, on which the US has imposed an additional 25% tariff , in addition to the existing 2.5% tariff, bringing the total tariffs on transport exports to the US to 27.5%.

Europe is now waiting for the Trump administration to issue further executive orders to clarify the tariffs on this and other sectors. Also under scrutiny are steel products, already subject to a 25% tariff, and pharmaceuticals. Yesterday, White House trade adviser Peter Navarro said there will likely be additional tariffs on pharmaceuticals because "it's very clear we have a national security crisis" due to the US's dependence on foreign companies. These products would also be included under Section 232, the provision that specifically empowers the US president to influence international trade to protect US products.

Meanwhile, from the US front, there are signs that tariffs could further drive inflation. After reassuring retail price data in July, where the annual growth rate remained unchanged at 2.7%, yesterday the PPI index—which tracks wholesale price movements—surprised markets with a 3.3% jump in July compared to a year earlier . This is the strongest increase since February and well above both the 2.4% recorded the previous month and the 2.5% expected by most observers. On a monthly basis, wholesale prices increased by 0.9%, versus expectations of 0.2%.

The rapid rise in wholesale prices could be the first sign of the inflationary effects of tariffs spreading to the American economy, which risks further exacerbating the dispute over interest rates between the majority of the Federal Reserve—which is very cautious about lowering interest rates, precisely because of its inflationary effects—and the Trump administration, which instead wants a rapid rate cut to revitalize the economy.